United States

Plenty of bright spots in health care private equity deals

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As more Americans sign up for health insurance as part of the Affordable Care Act (ACA), the health care sector becomes increasingly attractive to private equity investors. This will translate to increased mergers and acquisitions (M&A) activity in health care companies for 2015 and beyond, with some subsectors becoming particularly attractive. The most attractive sectors for M&A at the moment provide alternatives to traditional medical care and include urgent-care clinics and telemedicine, which are more cost-effective and less expensive than visiting a hospital or physician.

Another area of growth outside of the ACA involves baby boomers who are creating new needs in the health care sector related to an aging population. Services including physical therapy, pain treatment, dermatology, ambulatory surgery, personal-emergency response and home health are among the hot health care subsectors.

Despite areas of concern, such as how the federally funded expansion of Medicaid will be paid for by states in the long term once federal money is no longer on the table, there is overall optimism about opportunities for private equity to invest in the health care sector.

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